Direct foreign investments in Russia collapsed by 92% in 2015

In 2015, the total amount of foreign direct investments worldwide increased by 36% compared with the previous year, and amounted to $1.7 trillion. At the same time in Russia it decreased by 92%, as reported by the World Investment Report prepared by the United Nations Conference on Trade and Development (UNCTAD).

Last year, global investments peaked after the global economic and financial crisis of 2008-2009. At the same time, last year the United States regained their traditional first place by the volume of foreign investments, surpassing China and Hong Kong.

The inflow of foreign direct investment in the US economy was $384 billion in 2015. The US used to lead by this indicator since the early 1980s, when UNCTAD started collecting data on financial flows, and all the way to 2014, when China got to the first place.

The club of the most attractive countries for investors in 2015 also included Hong Kong (China) ($163 billion), Mainland China ($136 billion), the Netherlands, United Kingdom, Singapore, India, Brazil, Canada, and France.

The main factor for the growth of the global foreign direct investments has been the inflow of funds into industrialized countries, which has almost doubled. However, this increase was mainly driven by cross-border mergers and acquisitions with minimal contribution to the projects related to productive assets. The volume of M&A transactions jumped by 61% – to $644 billion.

Comparing with the year 2014, investment flows into developing countries increased only by 5%, and by the end of 2015 reached $741 billion. Investments in developing Asian countries increased by 15%, while for India it doubled, reaching $59 billion.

The report finds that for countries with transitional economies the flow of foreign direct investment declined by 54%. They link this decline to conflicts, and decline in commodity prices. The largest decrease in foreign direct investment in this group was observed in Russia and Kazakhstan – 92% and 66%, respectively.